Homeowner didn’t timely replace fire-damaged house

Where an insurance policy required a homeowner to replace his damaged property within two years from the date of the fire, but the homeowner waited more than two years before purchasing a replacement house and did not tell the carrier until another two years elapsed, he was not entitled to replacement cost benefits.

Background

Ray Lewis Hale contends that State Farm Fire & Casualty Co. has failed to pay the amounts owed under a fire insurance policy after his home was destroyed by fire. State Farm has moved for summary judgment.

Coverage A

Coverage A provided that State Farm would pay “the cost to repair or replace” the premises. However, it also provided that “until actual repair or replacement is completed, we will pay only the actual cash value at the time of the loss.” The policy also provided that “[n]o action shall be brought unless there has been compliance with the policy provisions [and] [t]he action must be started within two years after the date of loss or damage.”

A few days after the fire, State Farm’s claim representative cautioned Hale that “[t]o make a claim for replacement cost benefits, you must repair or replace the damaged property by November 24th 2020,” which was the two-year anniversary of the fire. Hale purchased a home in Bristol, Tennessee, on Dec. 1, 2020, which Hale contends was a replacement for his destroyed residence.

Hale did not advise State Farm of this purchase and his claim that it was a replacement until June of 2022, during discovery in the present action, and nearly four years after the fire. State Farm contends that because the residence was not replaced (or repaired) within two years, Hale’s action for replacement cost is barred by the contractual limitation period.

At oral argument, Hale’s counsel argued that there had been “substantial compliance” with the terms of the policy within the time limit and that in any event, State Farm’s payment to Hale of the amounts it had determined were due constituted a waiver by State Farm of the time limit contained in the policy. The court cannot accept the plaintiff’s arguments.

Hale’s ability to sue for recovery under the policy hinged on two conditions: (1) that Hale comply with the policy provisions, which would include the complete replacement condition precedent and (2) that Hale bring the action for such recovery within two years of the loss. It therefore follows that the replacement must have been complete within two years of the loss, or before timely filing suit, in order to recover any such amount.

Coverage B

Coverage B provides that the insured must prepare an inventory of the lost personal property, together with “all bills, receipts and related documents that substantial the figures on the inventory.” The evidence shows that Hale submitted inventories in regard to his loss of contents claim, but without supporting documentation. During the examination of Hale under oath, it was admitted that there were inaccuracies as to prior inventories provided. Hale was advised that he could supplement an inventory “at a later date.”

The claims representative met with Hale’s counsel on Oct. 9, 2019, on the status of Hale’s claim but that meeting ended without resolution. Despite multiple letters thereafter from the claims representative advising that further information was needed, there was no further response on behalf of Hale. Accordingly, State Farm sent checks for Hale based upon its investigation, which were negotiated and paid. State Farm heard nothing further until this suit was served upon it in 2021. State Farm thus contends that Hale cannot recover further amounts since he was not in compliance with the terms of the policy.

The court agrees. Hale failed to substantiate further payments with documentation before filing suit, despite State Farm’s multiple reminders. Thus, because Hale did not fulfill his obligations under the contract, he has not satisfied a condition precedent to filing suit and State Farm is excused from payments it might have owed had Hale complied.

Furthermore, Hale has the burden of proving waiver, and he has not presented any evidence or cognizable argument that State Farm has waived the assertion of the contractual provisions at issue. Furthermore, while it is correct that under Virginia law, an insured is required only “reasonable and substantial compliance” with certain conditions of a fire policy, the court does not find such compliance here.

Defendant’s motion for summary judgment granted.

Hale v. State Farm Fire & Casualty Co., Case No. 1:21-cv-00049, Nov. 18, 2022. WDVA at Abingdon (Jones). VLW 022-3-527. 9 pp.